High Roller Technologies, Inc.(US:ROLR)2025-08-12 20:02markdown PART I – Financial Information [Item 1. Condensed Consolidated Financial Statements (unaudited)](index=5&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) The company reported a net loss of $3.9 million for the six months ended June 30, 2025, an increase from a $3.4 million loss in the same period of 2024. As of June 30, 2025, the company had a working capital deficiency of $5.0 million and an accumulated deficit of $31.0 million. These factors, along with historical reliance on affiliate financing, have led management to conclude there is substantial doubt about the company's ability to continue as a going concern. The financial statements include condensed balance sheets, statements of operations, stockholders' equity, cash flows, and accompanying notes [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets decreased to $12.3 million from $16.6 million at year-end 2024, primarily due to a significant reduction in cash and cash equivalents. Total liabilities also decreased to $9.7 million from $10.9 million, while total stockholders' equity fell from $5.7 million to $2.6 million, driven by the accumulated deficit Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $2,682 | $6,869 | | Total current assets | $3,855 | $8,779 | | Total assets | $12,308 | $16,625 | | **Liabilities & Equity** | | | | Total current liabilities | $8,880 | $10,168 | | Total liabilities | $9,678 | $10,904 | | Accumulated deficit | $(31,011) | $(27,143) | | Total stockholders' equity | $2,630 | $5,721 | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) For the six months ended June 30, 2025, revenues increased to $13.7 million from $12.3 million year-over-year. However, total operating expenses also rose to $17.4 million from $15.6 million, resulting in a larger loss from operations of $3.7 million compared to $3.3 million in the prior year. The net loss for the six-month period widened to $3.9 million from $3.4 million Statement of Operations Summary (in thousands) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenues, net | $6,936 | $5,803 | $13,707 | $12,310 | | Total operating expenses | $7,438 | $7,283 | $17,421 | $15,615 | | Loss from operations | $(502) | $(1,480) | $(3,714) | $(3,305) | | Net loss | $(592) | $(1,504) | $(3,868) | $(3,353) | | Net loss per share | $(0.07) | $(0.21) | $(0.46) | $(0.48) | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash used in operating activities significantly increased to $4.4 million from $1.1 million in the prior-year period. Net cash used in investing activities was slightly higher at $296 thousand. Financing activities used $90 thousand in cash, a reversal from providing $337 thousand in the same period of 2024. Overall, cash, cash equivalents, and restricted cash decreased by $4.3 million during the period Cash Flow Summary (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(4,448) | $(1,130) | | Net cash used in investing activities | $(296) | $(242) | | Net cash (used in)/provided by financing activities | $(90) | $337 | | **Net change in cash, cash equivalents, and restricted cash** | **$(4,338)** | **$(824)** | [Notes to the Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) Key notes highlight the company's operational structure, including the recent incorporation of several subsidiaries for licensing in Curacao and Ontario. A significant disclosure is the management's conclusion of substantial doubt about the company's ability to continue as a going concern due to a working capital deficiency and accumulated deficit. Revenue is primarily generated from net gaming revenue, with Finland being the largest market. The notes also detail significant related-party transactions, particularly with Spike Up for marketing services, and provide reconciliations for non-GAAP measures like Adjusted EBITDA - Management has concluded there is **substantial doubt** about the Company's ability to continue as a going concern due to a **$5.0 million** working capital deficiency, a **$31.0 million** accumulated deficit, and historical reliance on affiliate financing[37](index=37&type=chunk)[38](index=38&type=chunk)[39](index=39&type=chunk) Revenue by Geography (Six Months Ended June 30) | Country | 2025 Revenue (in thousands) | % of Total | 2024 Revenue (in thousands) | % of Total | | :--- | :--- | :--- | :--- | :--- | | Finland | $7,942 | 57% | $4,813 | 39% | | New Zealand | $2,954 | 22% | $3,096 | 25% | | Canada | $1,355 | 10% | $1,776 | 14% | | Norway | $909 | 7% | $1,878 | 15% | - The company has significant related-party balances, with **$1.3 million** due from affiliates and **$2.4 million** due to affiliates as of June 30, 2025, primarily with Spike Up and Happy Hour Entertainment Holdings[100](index=100&type=chunk) - The company has pending litigation in Austria and Germany regarding player claims, for which it has recorded a provision in accrued expenses[108](index=108&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's evolution as an iCasino operator, focusing on European markets with plans for North American expansion. Key performance indicators showed mixed results, with a decrease in quarterly active users and wagers in Q2 2025 compared to prior quarters. Revenue for the first six months of 2025 increased 11% to $13.7 million, driven by a strategic shift to more profitable markets, particularly Finland. However, increased operating expenses, mainly from marketing, led to a higher net loss of $3.9 million. The discussion reiterates the significant liquidity challenges and the 'going concern' warning, highlighting the company's negative working capital and reliance on future financing [Our Business and Key Performance Indicators](index=30&type=section&id=Our%20Business%20and%20Key%20Performance%20Indicators) The company operates as a growth-oriented iCasino company, primarily under the HighRoller.com and Fruta.com domains. Its strategy involves a multi-brand approach, focusing on regulated markets in Europe with intentions to enter North America. Key performance indicators for Q2 2025 showed a decline, with quarterly active users dropping to 19,675 from 29,946 in Q1 2025, and wagers remaining flat at approximately $153 million - The company is implementing a multi-brand strategy, having soft-launched its second brand, Fruta.com, in December 2023, to target new demographics and leverage its existing platform and licenses[127](index=127&type=chunk) Key Performance Indicators (Q1 2025 vs Q2 2025) | Metric | Q2 2025 | Q1 2025 | Change | | :--- | :--- | :--- | :--- | | Quarterly Active Users | 19,675 | 29,946 | (34.3)% | | Quarterly UDCs | 17,036 | 27,289 | (37.6)% | | Quarterly Wagers (in thousands) | $153,150 | $153,298 | (0.1)% | - User deposits increased to **$24.4 million** in Q2 2025 from **$21.3 million** in Q2 2024, while active users decreased from 22,505 to 19,675 over the same period[132](index=132&type=chunk) [Results of Operations](index=33&type=section&id=Results%20of%20Operations) For the six months ended June 30, 2025, revenue grew 11% year-over-year to $13.7 million, largely due to a 841% increase in intra-group services revenue and a strategic focus on more profitable markets like Finland. Despite this, net loss widened to $3.9 million from $3.4 million, driven by a $2.0 million increase in advertising and promotions expenses. For Q2 2025, the company saw a significant improvement, with the loss from operations narrowing to $502 thousand from $1.5 million in Q2 2024, reflecting a new marketing strategy focused on cost-effectiveness - Revenue for the six months ended June 30, 2025, increased by **11%** to **$13.7 million**, primarily due to a strategic focus on more favorable markets and a **$2.4 million** (**841%**) increase in net revenue from intra-group services arrangements[148](index=148&type=chunk)[150](index=150&type=chunk) - Advertising and promotions expenses for the six months ended June 30, 2025, increased by **$2.0 million** to **$5.9 million** compared to the prior year, attributed to increased marketing spend utilizing funds from the initial public offering[167](index=167&type=chunk)[168](index=168&type=chunk) - Loss from operations for Q2 2025 improved to **$502 thousand** from **$1.5 million** in Q2 2024, attributed to an updated marketing strategy and better cost management[175](index=175&type=chunk) [Liquidity and Capital Resources](index=39&type=section&id=Liquidity%20and%20Capital%20Resources) The company faces significant liquidity challenges, with cash and cash equivalents at $2.7 million as of June 30, 2025, an accumulated deficit of $31.0 million, and negative working capital of $5.0 million. Net cash used in operations for the first six months of 2025 was $4.4 million. The independent auditor's report includes a 'going concern' explanatory paragraph, indicating substantial doubt about the company's ability to continue operations without securing additional financing - As of June 30, 2025, the company had **$2.7 million** in cash and cash equivalents, an accumulated deficit of **$31.0 million**, and negative working capital of **$5.0 million**[186](index=186&type=chunk) - The independent auditor's report for fiscal year 2023 included a 'going concern' paragraph, expressing **substantial doubt** about the company's ability to continue[188](index=188&type=chunk) Cash Flow Summary (Six Months Ended June 30, in thousands) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(4,448) | $(1,130) | | Net cash used in investing activities | $(296) | $(242) | | Net cash (used in) provided by financing activities | $(90) | $337 | [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=43&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a smaller reporting company, High Roller Technologies, Inc. is not required to provide the information for this item - The company is not required to provide quantitative and qualitative disclosures about market risk as it qualifies as a smaller reporting company[211](index=211&type=chunk) [Item 4. Controls and Procedures](index=43&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that as of June 30, 2025, the company's disclosure controls and procedures were not effective. This is due to a previously identified material weakness in internal control over financial reporting related to the company's internal ability to prepare consolidated financial statements. The company is implementing a remediation plan, which includes expanding its financial and accounting staff and retaining outside consultants, a process expected to continue through 2025 - Management concluded that as of June 30, 2025, the company's disclosure controls and procedures were **not effective** at a reasonable assurance level[212](index=212&type=chunk) - The ineffectiveness is due to a material weakness in internal control over financial reporting, specifically related to the internal ability to prepare consolidated financial statements[212](index=212&type=chunk)[217](index=217&type=chunk) - Remediation measures are underway, including hiring a CFO, Controller, and other staff, and retaining outside consultants. The process is expected to continue through 2025[214](index=214&type=chunk)[217](index=217&type=chunk) PART II – Other Information [Item 1. Legal Proceedings](index=46&type=section&id=Item%201.%20Legal%20Proceedings) The company is subject to legal claims in the normal course of business. Specifically, its subsidiary, Ellmount Entertainment, Ltd., has pending litigation in Austria and Germany related to player claims and legal fees. The company has made provisions for these claims and is not currently targeting these markets - The company's subsidiary, Ellmount Entertainment, Ltd., has pending litigation in Austria and Germany concerning player claims and associated legal fees[220](index=220&type=chunk) [Item 1A. Risk Factors](index=46&type=section&id=Item%201A.%20Risk%20Factors) A material new risk factor has emerged. On June 4, 2025, the company was notified by NYSE American LLC that it is no longer in compliance with the exchange's continued listing standards due to its stockholders' equity falling below the required $4 million threshold. The company has submitted a compliance plan, but there is no assurance it will be accepted or that compliance will be regained, which could lead to the delisting of its securities - On June 4, 2025, the company was notified by NYSE American LLC of non-compliance with continued listing standards because its stockholders' equity of approximately **$2.8 million** was below the required **$4 million** minimum[223](index=223&type=chunk) - The company has submitted a plan to regain compliance by December 4, 2026, but if the plan is not accepted or if compliance is not achieved, the company's stock will be subject to **delisting** procedures[223](index=223&type=chunk) - Potential **delisting** could negatively impact the stock's liquidity and market price, and hinder the company's ability to raise equity financing[224](index=224&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=46&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There were no unregistered sales of equity securities during the period - **None**[225](index=225&type=chunk) [Item 3. Defaults Upon Senior Securities](index=47&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities during the period - **None**[228](index=228&type=chunk) [Item 4. Mine Safety Disclosure](index=47&type=section&id=Item%204.%20Mine%20Safety%20Disclosure) This item is not applicable to the company - **Not applicable**[229](index=229&type=chunk) [Item 5. Other Information](index=48&type=section&id=Item%205.%20Other%20Information) During the last fiscal quarter, no director or officer of the company adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the last fiscal quarter[230](index=230&type=chunk) [Item 6. Exhibits](index=49&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the report, including certifications from the Principal Executive Officer and Principal Financial Officer as required by the Sarbanes-Oxley Act, and Inline XBRL documents